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Yahoo suing Facebook over patent infringements

John Moe Mar 13, 2012

Jeremy Hobson: Yahoo is suing Facebook for violating patents that Yahoo owns. The patents in question aren’t for obscure parts of Facebook’s business. They involve advertising, which is Facebook’s big money maker. And the dispute comes just as Facebook is trying to look great to investors as it prepares to go public.

Marketplace Tech Report host John Moe is with us live to explain what’s going on here. Good morning, John.

John Moe: Good morning.

Hobson: Well tell us, what exactly this complaint all about?

Moe: Everything. Yahoo says the core of what Facebook does is based on things Yahoo already was doing: creating profiles, the newsfeed, the privacy policy, messaging. They say that was all stuff that Yahoo came up with first, and it’s covered by patents that Yahoo owns — pretty much everything except the color blue that Facebook uses in its design is covered here.

Now, Facebook has been eating Yahoo’s lunch for a while in social, so this is a really bold move to try to get back some footing in that competition. And for its part, Facebook says this is disappointing to be sued by what it considers to be a partner, and it will defend itself. You’ve got to wonder if this going to hurt Yahoo’s benefits from that partnership.

Hobson: And John, patents sound obscure in everyday conversation, but I gather this is pretty central to how Silicon Valley does business, and these fights really matter?

Moe: Yeah, patent lawsuits are the ground troops in the wars between these companies. We’ve seen a ton of suits lately coming from Apple, Google, Samsung, Microsoft. Kodak is even involved — I mean, everybody’s getting on board. And there’s a lot of concern that it could mean higher prices for you and me — these lawyers gotta get paid, after all.

And there’s concern that it could have a chilling effect on innovation, because if you’re one of these developers trying to come up with the next, big, amazing thing, you’re looking over your shoulder wondering if you might get sued as a result of what you come up with because somebody else came up with it first. I mean, there’s a line between the inspiration that you draw and the innovation you come up with.

Hobson: John Moe, host of Marketplace Tech Report, thanks as always.

Moe: Thanks Jeremy.

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